Prescott Real Estate News Blog's purpose is to keep current, past, and potential clients apprised of the real estate market conditions for the Prescott, Arizona Area. National and state news and events will be posted but special emphasis will be placed on Prescott Area and the Yavapai County - Prescott, Prescott Valley, Chino Valley, Dewey and Kirkland/Skull Valley.
-Prescott Real Estate News

>> Market Update

QUOTE OF THE WEEK..."Success is the maximum utilization of the ability that you have."--Zig Ziglar, American author and motivational speakerINFO THAT HITS US WHERE WE LIVE...To help the economy succeed, the Fed is certainly using its ability to the max. Coming out of the FOMC meeting Wednesday, the Fed announced "Operation Twist"--a strategy of selling its short-term securities to buy long-term bonds to drive down long term interest rates, especially for mortgages. This latest Fed effort to help the housing market is great news for anyone thinking of buying a home, as mortgage rates should stay very very low.

Wednesday's other great news for housing was August Existing Home Sales came in UP 7.7%, to an annual rate just the other side of 5 million units, the best reading since March. This dropped the supply of existing homes to 8.5 months. Tuesday, August Housing Starts were down 5%, to a 571,000 unit annual rate. But, hey, dealing with a hurricane and floods, builders across a good part of the East were hesitant to break ground. Better news came with building permits--UP 3.2% for the month and now UP 7.8% versus a year ago

BUSINESS TIP OF THE WEEK...Don't avoid taking a prudent risk just because risks sometimes result in failure. Without the possibility of failure, there is no possibility of success.

>> Review of Last Week

IT'S ALL GREEK TO WALL STREET...The week before last, investors were optimistic about Greek debt and European financial problems and the stock market went up. Last week, Wall Street worried that Greece wasn't making progress with the austerity plan that would earn it a bail out from its richer neighbors. Then Moody's downgraded Italy's debt. Lastly, the Fed chimed in:"There are significant downside risks to the economic outlook, including strains in global financial markets." Stocks suffered their worst weekly loss since October 2008.

Wall Streeters were obviously ignoring the good economic signs. Same-store sales were UP 3.4% versus a year ago, as measured by the International Council of Shopping Centers. Redbook Research reported an even better 4.1% boost in same-store sales. There was the positive housing data reported above. Then, some economists said they expect consumer spending to climb at a 1.5%–2% annual rate in Q3. The economy may not be booming, but it's not double-dipping back into recession either.

For the week, the Dow ended down 6.4%, at 10771; the S&P 500 was down 6.5%, to 1136; and the Nasdaq was down 5.3%, to 2483.

It was an historic week in the bond market, as Treasury yields dropped to record lows after the Fed announced its $400 billion "twist" to sell shorter term bonds and buy longer ones. The FNMA 3.5% bond we track closed Friday at $102.27, UP 1.22 for the week. National average mortgage rates held steady, but they're already at historic levels, well below where they were a year ago. Now with the Fed's Operation Twist, some observers say rates may go even lower.

DID YOU KNOW?...The majority of real estate agents believe that the biggest reason homes don't sell is simply price.

>> This Week’s Forecast

MORE ON HOME SALES, GDP, INFLATION...Monday, August New Home Sales are expected down a tad from the prior month. Thursday's Pending Home Sales for July are predicted down a little. That day will also reveal the Q2 GDP, Third Estimate, forecast up slightly but still registering modest 1.2% growth. Friday brings a reading on August inflation in the form of Core PCE Prices, the Fed's favorite gauge, which should still be within their target range.

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months...Economists don't see a hike in the Funds rate, given the Fed's latest view of the economy and its stated intention to keep rates at super low levels through summer 2013. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:

Consensus

Nov 2

0%–0.25%

Dec 13

0%–0.25%

Jan 25

0%–0.25%

Probability of change from current policy:

After FOMC meeting on:

Consensus

Nov 2

<1%

Dec 13

<1%

Jan 25

<1%

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This is not the opinion of Brad Bergamini, Realty Executives Northern Arizona or any of its affiliates. This post is for informational purpose only and is not guaranteed and does not render as legal advice. Buying and selling Real Estate in Arizona or Prescott Arizona is a serious task and should be consulted with personally with Realtor or Real Estate Attorney. Please visit my website for contact information